Burberry London Perfume Marketing Strategy 2012

Introduction and Strategic Aims

The organization selected for this proposed new marketing strategy is Burberry (formally Thomas Burberry). Burberry is a distinctive luxury brand with international recognition and broad appeal. The company designs, sources, manufactures, and distributes high-quality apparel and accessories. Founded in Basingstoke, England in 1856, Burberry has a unique heritage associated with Great Britain and positions itself as the authentic British lifestyle brand. From its founding, Burberry established a reputation for innovation, quality, and style through developments such as the invention of gabardine — believed to be the world's first weatherproof and breathable fabric — and the creation of iconic products including the trench coat and the Burberry check.

A new marketing strategy is proposed for the Burberry London perfume range. Although the perfume was introduced some years ago — the men's fragrance was launched in 1997 and the women's fragrance in 1995 — sales are not increasing as quickly as hoped. This is likely due to stronger marketing by competing perfume brands. In particular, the overall packaging and bottle design is considered too plain and insufficiently persuasive to the consumer. It is therefore necessary to give this product a new marketing strategy and re-launch it with more distinctive packaging (Warren, 2007).

The main aims for the new 2012 strategy are:

1) To increase overall sales for the Burberry London perfume range; 2) To breathe new life into the product life cycle by re-launching it; 3) To increase market share against competitor brands.

In developing this new marketing strategy, the following principles have been applied: the new product meets actual and potential customer needs through direct communication with customers; it is based on a thorough understanding of the customer base; it takes into account the competitive environment by understanding competitors and maintaining an advantage over them; it accounts for external factors that influence the market; and it considers internal influences that may affect the organization's ability to implement the strategy (Aaker, 2008).

European Fragrance and Cosmetics Market Overview

The European retail market for cosmetics and fragrances was estimated at £1.46 billion in 2011, representing an increase of 4.4% on the previous year's value.

Table 1: The European market for cosmetics by value at current prices (Burberry, 2012)

Cosmetics (£m): 2008 — 585.5 | 2009 — 620.0 | 2010 — 660.0 | 2011 — 714.0. Fragrances (£m): 2008 — 650.0 | 2009 — 655.0 | 2010 — 662.5 | 2011 — 680.0. Total (£m): 2008 — 1,235 | 2009 — 1,275.0 | 2010 — 1,322 | 2011 — 1,394.0. Year-on-year % change: 2008 — 3.2% | 2009 — 3.7% | 2010 — 5.4% | 2011 — 4.4%.

The perfume and cosmetics industry is substantial. The European retail market for perfumes and fragrances grew by 4.4% between 2001 and 2011, reaching a value of £1.46 billion. Consumers base their choice of cosmetic or fragrance on the image of a particular brand as well as on the product's functional qualities. Fashion plays a key role in defining this image, and in-store presentation and method of distribution are also important factors (Simon, 1979).

According to International Flavors & Fragrances, the failure rate for new fragrances is approximately 90% after the first year and 99% after three years. For a fragrance to maintain its popularity for decades, as brands such as Chanel No. 5 and Miss Dior have done, is no small achievement. Vast promotional spending is necessary to maintain an established brand, let alone launch a new one. In the year to September 2010, for example, £34.2 million was spent on advertising women's premium fragrances alone (Burberry, 2012).

Fine or premium fragrances account for around two-thirds of the fragrance market by value and one-third by volume. Men's fine fragrances tend not to command prices as high as those aimed at women, but male fragrances (premium and mass market combined) still accounted for an estimated £240 million, or 34%, of total retail sales of fragrances in 2010. Retail sales of fragrances increased by 3.8% between 2001 and 2011, to an estimated £705.5 million (Burberry, 2012).

The rate of growth in sales of men's toiletries has slowed significantly, and various efforts to stimulate the market — such as Boots for Men shops and Lynx Barber Shops — have not met with success. Women, on the other hand, are keen to try new scents while remaining loyal to their established favorites. According to the publication Soap, Perfumery & Cosmetics (March 2011), most women typically use at least three fragrances regularly, and often matching body lotions and sprays as well.

Strategic Framework: Abell's Five Options and Market Penetration

A common tool used in marketing strategy was developed by Abell (1980), whose model gives organizations five strategic business options:

1. Market Penetration: This involves increasing sales of an existing product and penetrating the market further by either promoting the product heavily or reducing prices to stimulate demand. 2. Product Development: The organization develops new products aimed at its existing market, in the hope of gaining greater custom and market share — for example, Sony launching the PlayStation 2 to replace an existing model. 3. Market Development: The organization adopts a strategy of selling existing products to new markets, either through a better understanding of segmentation or by selling the product in new overseas markets. 4. Diversification: Moving away from core activities to provide something entirely new — for example, transitioning from selling food products to selling automobiles. 5. Consolidation: The organization adopts a strategy of withdrawing from particular markets, scaling back operations, and concentrating on existing products in existing markets.

The new strategy is aimed at achieving overall growth for the Burberry London perfume through market penetration. Market penetration is a key objective for many organizations seeking to improve their competitive position. This option aligns with the proposed strategy of re-launching the Burberry London perfume. Sales to existing and new customers will be increased by modifying the product modestly and promoting it more widely, ensuring that consumers are both aware that the product still exists and that it has been refreshed (Baker, 2008).

References

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